381 Southwark Park Road RTM Company Limited v Click St Andrews Limited & Ors.

A freezing injunction is a protective remedy, not security for a prospective judgment. The applicant must establish a good arguable case, assets within the jurisdiction, a real and objectively assessed risk of unjustified dissipation leaving a judgment unsatisfied, and that relief is just and convenient.

The risk must be supported by solid evidence. Ordinary-course dealings, including repayment of secured development finance, do not by themselves establish dissipation. However, unexplained and opaque intra-group transfers may support a real risk. Relief may be continued against a defendant with assets and a claim, while being discharged against group companies lacking a sufficient claim or meaningful assets where restraint would cause disproportionate commercial harm.

The applicants, a right-to-manage company and leaseholders, sought continuation of a without-notice freezing injunction against three property-development companies pending claims concerning water damage and alleged contractual, guarantee, negligence, nuisance and party-wall liabilities.

The first respondent had developed rooftop flats and sold two of them, applying the proceeds towards secured development borrowing. The applicants alleged dissipation and relied on concerns about intra-group transfers. The respondents disputed liability, challenged the without-notice disclosure, and sought discharge or variation of the order.

The central issues were whether the applicants had a good arguable claim, whether there was a real risk of dissipation, whether the respondents held assets against which judgment could be enforced, and whether continuation of the injunction was just and convenient.

1. Disposition. The freezing injunction was continued against Click St Andrews until trial or further order. It was not continued against Click Holdings or Click Above. The order was modified to permit specified payments and the sale of Flat 17, subject to proceeds being paid into the specified account. Costs were reserved.
2. Applicable test. Under Senior Courts Act 1981, s 37, the court may grant an injunction where relief is just and convenient. The applicant must show a good arguable case, assets within the jurisdiction against which judgment could be enforced, a real risk that assets will be dealt with outside the ordinary course of business so that a judgment may remain unsatisfied, and that relief is just and convenient. The inquiry is objective and does not require proof of an intention to dissipate.
3. Disclosure. The applicants failed to make full and frank disclosure at the without-notice hearing by not identifying the real possibility that sale proceeds had been used to repay secured borrowing. The failure was not deliberate, and the respondents’ obfuscation materially contributed to the confusion. In the interests of justice, the original order was not set aside.
4. Risk of dissipation. Repayment of secured development finance from the proceeds of Flats 15 and 16 was justified and in the ordinary course of business. Complaints by a purchaser, possible defects, alleged phoenixing and delay in addressing losses did not constitute solid evidence of dissipation. The unexplained movement of funds within the group, absence of formal loan records, discrepancies in accounts, and use of borrowing secured on the Property to fund another development did establish a real risk that Click St Andrews’ assets would be dissipated to defeat judgment.
5. Separate respondents. Click Holdings had no assets against which meaningful relief could be granted, and freezing it would threaten other developments. The applicants had not shown a good arguable claim against Click Above. Although a freezing order may in principle be made against a non-party whose assets may truly belong to a defendant, the evidence did not justify that course here. The balance of convenience therefore favoured allowing Click Above and other unclaimed group companies to operate.
6. Cross-undertaking and ancillary applications. The applicants had not shown sufficient means-based grounds to dispense with or limit the usual cross-undertaking in damages. Their unlimited undertaking and £20,000 security were retained. Applications to join additional respondents for disclosure and to inspect bank records and corporate offices were refused.